What is a maquiladora?

A maquiladora is a Mexican assembly or manufacturing operation that can be subject up to 100 percent non-Mexican ownership. A maquiladora utilizes competitively priced Mexican labor in assembly processing and/or other manufacturing operations, allowing these operations to bring in most capital equipment and machinery from abroad.

Maquiladora operations are generally labor-intensive cost centers, with most production geared for export from México. Maquiladoras may be entirely foreign managed, unlike multi-nationals operating in México.

Where can a maquiladora locate?

Although most maquiladoras locate along the U.S.-México border, it is possible for them to locate anywhere else in México, except for Mexico City.

What products can maquiladoras manufacture?

Maquiladoras can manufacture a broad array of products under Mexican law. Exceptions to this allowance include industries like:

  • Petroleum
  • Firearms
  • Petrochemicals and other chemicals
  • Items containing radioactive elements

Do products have to be fully assembled or processed in México?

No. In fact, most items are further processed in the country to which they are ultimately re-exported.

Are maquiladoras required to incorporate Mexican components?

No. Maquiladoras are not required to use any Mexican components in assembly processing or manufacturing.

What are the Mexican tariff/duty policies relating to this program?

As long as the imported components brought into México are destined for export, no Mexican import duty is levied on the temporarily imported maquiladora components. In lieu of duties, maquiladora operators must post a bond with the Mexican customs service to guarantee that components and raw materials are re-exported from México within a six-month period. A bond on capital equipment and machinery ensures that they will be fully returned to the maquiladora operator’s country of origin once it ceases operations in México.

What are the U.S. tariff/duty policies relating to this program?

U.S. Customs has three regulations that complement the maquiladora program.

  1. Customs provision allows the import into the U.S. of metal products processed abroad with duties assessed on the value added to those goods (i.e., the total value of Mexican inputs, including labor, electricity, component parts, etc.), rather than levying an import duty on the total value of the product. The products must have been processed in the U.S. before being sent abroad and then must be further processed in the U.S. upon their return.
  2. Customs provision allows an article assembled in México from U.S.-made components to be exempt from duty on the value of such components. These goods may or may not involve metal components. U.S. Customs law allows for machinery of U.S. origin to be returned to the U.S. duty-free.
  3. If the goods assembled or manufactured in México contain at least 35 percent Mexican content upon import into the U.S., they may be eligible for treatment under the U.S. Generalized System Preferences (GSP). GSP-eligible items may enter the U.S. market with no duty levied.

What other options exist besides starting my own stand-alone maquiladora?

Shelter, subcontract and turnkey operations represent viable alternatives to full-fledged maquiladora operations. A subcontract maquiladora operation involves the least commitment and/or activity on the part of the non-Mexican investor.

What about foreign employee and management entry into México?

The maquiladora may bring in as many foreign employees as necessary with the exception of hourly laborers. All hourly employees are required to be Mexican. Foreign employees must obtain work visas, which usually require a three- to five-day wait.

What are the advantages of the maquiladora program?

  • Low labor costs
  • Trainable workforce
  • Proximity to U.S. market and distribution centers
  • Cooperative, predominantly nonunion workforce
  • Access to experienced legal and customs services in El Paso, Cd. Juárez and Chihuahua City
  • Fine quality of life for U.S. managers living in El Paso
  • Sophisticated transportation infrastructure
  • Experienced Mexican technicians and supervisors
  • Educational institutions providing qualified graduates for industry and commerce in El Paso, Cd. Juárez, and Chihuahua City
  • World-class production facilities
  • Emerging industrial support service base in El Paso, New Mexico and Juárez

How many people do maquiladoras employ?

  • 330+ maquiladora plants employ more than 178,900 workers in Cd. Juárez
  • 479 maquiladora operations employ 252,386 people in  the State of Chihuahua
  • The Mexican maquiladora industry employs more than 1,851,432  people in 5,093  plants

Source: MexicoNow Magazine, Issue No. 56 January - February 2012
Updated: April 2012

in-bond maquiladora program

The In-Bond Maquiladora Program was established in 1965 by the Mexican government to help alleviate unemployment along the U.S.-México border. Under the plan, temporary immigration (work) permits can be readily obtained for foreigners to allow management, technical and support personnel to work in the maquiladora operation. Maquiladoras must be incorporated under Mexican law.

The Program:

  • Allows a foreign (non-Mexican) individual or firm to establish wholly owned operations in México for the purpose of manufacturing products for exportation
  • Allows for temporary, duty-free (in-bound) importation of the capital equipment and machinery, including the materials for production
  • Allows foreign ownership of real estate in border areas (and seashores) by establishing a trust through a Mexican bank
  • Allows items assembled and manufactured in maquiladoras to be sold in México.

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